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July 16th Early Week Silver Market Update

Gold and silver started Tuesday in a better position than where they ended Monday thanks to some weaker numbers being posted by outside forces. The US Dollar Index is lower in the early morning hours of Tuesday while crude oil prices are up a bit. Both of these factors make it a favorable atmosphere for gold and silver to gain value.

While there are a few economic reports due out in the US on Tuesday, most traders will overlook these in anticipation of Ben Bernanke's address to the US House of Representatives on Wednesday. Additionally, the data due out today is expected to emit very few surprising results and so long as that is the case it will like have little to no bearing on the spot value of precious metals.

Ben Bernanke to Speak On Relevant Issues

Tomorrow is perhaps the most highly anticipated day of the week for investors and market watchers as the Federal Reserve Chairman, Ben Bernanke, is scheduled to address the US House of Representatives. His main talking points will center around the current state of the US economy as well as the future of monetary policy in the US, specifically Quantitative Easing's future. Whenever anyone from the Fed is set to speak it tends to catch the eyes of the precious metals market, though the fact that it is Ben Bernanke speaking means people will be watching with increased scrutiny.

At this point the popular thought is that Quantitative Easing will be done away with or at least wound down by the end of 2013. With the US economy improving and growing like it has been lately many feel as though there is no longer a need to continue pumping our economy with paper currency. Though not everyone agrees with this sentiment, it is hard to argue with the positive numbers the US economy has been emitting as of late.

Regardless, there is little doubt in my mind that Bernanke's words tomorrow will help sway the spot prices of gold and silver in one direction or another.

Ailing Economies, Improving Physical Demand

For a majority of the summer thus far the spot prices of both gold and silver have been inordinately low. Usually, whenever the spot price drops as dramatically as it has in recent history, demand for gold and silver tends to skyrocket. Such has not been the case this go around and people were beginning to wonder why. The answer to that was simple yet hard to understand. While Asia is usually a large consumer of both gold and silver, this summer has been quite different in that even low prices have not spurred Asian interest in metals. Asian demand for physical gold and silver has been very low this summer, that is, up until now. A recent report has indicated that demand for gold and silver in India and the rest of Asia is on the up and up. If this is actually true perhaps the spot prices of both gold and silver will shortly begin to reflect this increased demand, though only time will tell.

In other news, the whole of the European Union has reported that exports and imports have both decreased yet again. This means that the EU may have to endure economic contraction for another quarter.

Posted in Market Updates

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